Whether you feel the golden era of manufactured spending has passed or not, the fact remains that opportunities tend to close faster than new ones open up. Pure manufactured spending (Read: Introduction to Today’s Manufactured Spending) is still viable, but it certainly has gotten harder. Reselling, which I propose to be the next frontier in manufactured spending is no easier. But I would argue that if you take a higher level view, it can open far more doors. It also is your entry into becoming a Weekend Entrepreneur.

Reselling, the next frontier for Manufactured Spending

Manufactured spending at its purest is a form of arbitrage. You are effectively buying miles and points at a discount and redeeming them at a higher value than you paid for them. Reselling is no different in that regard. As we dive deeper though, there are rather pointed differences:

Reselling is a business

That means that you need to consider taxes and reporting responsibilities.

Reselling avails you the opportunity to earn miles and points at negative cost.

Choosing the right products that you can earn a profit on in their own right, means that the miles and points become pure gravy. Scale that up, and you’ll have no problem with frequent flyer program devaluations but remember, that Amazon can be just like an Airline, they make the rules.

Reselling can be riskier than pure manufactured spending

Because you are buying product, there is the risk that you might have chosen a bad product, or even if you’ve chosen the best product out there, you still have the liability of returns. Bottom line, there is more risk than just having to pay all of your expenses for a month with Visa Gift Cards (Read More: Considerations for Reselling as a Method for Manufactured Spending).

You’re still interested – what are the next steps?

The first step that I always recommend–once you’ve considered the risks—is to consider your risk tolerance and identify a seed budget. Yes, you want to generate thousands of miles and points, but you need to be reasonable as you dive into a business. You want to identify an amount of money that you are willing to lose. Reselling can be like gambling. You are making a bet that a product that you have purchased will sell. If it does sell, you are making the bet that you will make a profit or at least break even. So please, identify a budget and stick to it, as you get your feet wet in this new venture.

Once you’ve identified a budget, consider what marketplaces you want to work with. I’m a fan of Amazon. Specifically, I am a huge fan of selling via Fulfillment by Amazon. Why? Because they do most of the time sensitive work. You source, prep, pack and ship your products to Amazon in bulk. Once your products reach Amazon’s warehouses, all you have to do is tweak the prices to get the products to sell. As your products sell, Amazon pulls them from the bins in the warehouse (read: A Look inside Amazon’s Warehouses) and ships them to your customer. Amazon provides all of the customer service unless the customer intentionally reaches out to you directly—via Amazon. In short – it makes reselling as a side gig feasible.

If you’ve chosen Fulfillment by Amazon, well, you’re in luck, because I have a beginner’s guide that covers creating an Amazon Seller account, all the way through your first shipment and sourcing tips. Check out the guide below:

Wrapping Up

I realize that asserting that reselling as a method for manufactured spending is not a terribly popular idea within the reseller world. In truth, it increases competition, and it generally pushes down profitability in some areas. Just look at iPad or Apple Watch prices over time. That said, I don’t believe those depressed prices are primarily due to mile and point collectors. I tend to believe that anyone that gets into reselling will logically pursue profit as soon as they see how much work it is. If you think about it, Manufactured Spending is a lot of work in and of itself, and there your “profits” are usually in the single percentage range.

With that said, I still believe Reselling is the next frontier in manufactured spending. I believed this 5 years ago when I started reselling, and it is true to this day, (Read more:My evolution as a reseller). Just know that there is risk, and this is a business. What does that mean? First, always pursue profit, the points will come. Furthermore, this can become work. For me, I bound it in such a way that I enjoy doing it. That doesn’t mean it always balances out though! During busy times like the fourth quarter, I commonly finish my day job only to come home and work for another few hours on the reselling business. Weekends can easily become more time for the reselling business. But you have to have boundaries. If you do, this is an excellent side gig that can also help increase your miles and points balances, and if you do it right, you should make some money too!

This is your semi-annual reminder that Fulfillment by Amazon long term storage fees hit 15 August. There are a few key things to note as we approach 15 August.

Long Term Storage Fees Assessed on All Inventory

A change that Amazon announced at the end of last year, was that Amazon will be assessing long term storage fees on all inventory. It used to be that you wouldn’t be assessed on the first unit, but that is no more.

Be careful what you create removal orders for!

This is particularly concerning, since we’re approaching Q4, but if you create a removal order between now and August 15th for “aged inventory” (e.g. those units that have been in a fulfillment center for longer than 6 months), you cannot send replenishment inventory until 1 January 2018! In other words, if you think you will sell these products during Q4, you may have to eat the storage fees.

Amazon doesn’t plan on doing a free removal promotion

Its only $0.50 a unit, but people seem to love the free removal promotions. Unfortunately, this time around, Amazon is being very clear that they don’t plan on doing any of the sort. Right now, Amazon is not hurting for storage space, or so they lead us to believe. In fact, I received an e-mail in the past week with a free storage fee promotion. Quite the turn from a year ago!

Think rationally about long term storage fees

Many folks see storage fees and start to think of how they can be avoided. That is logical, and its a good plan to do early on. Once Amazon starts sending out notices about the annual fees though, I would argue that you are too late. The fact is, storage fees are a cost of doing business. My fees, if I make no sales of my aged inventory between now and 15 August, will be less than $150. I can live with that. In fact, I won’t even lose sleep over that. So I would encourage you, please, think rationally, don’t go overboard, and don’t risk not being able to send in more of an ASIN during Q4!

Selling chocolate and other meltable inventory via Amazon is a great gig in the winter, however, during the summer months, Amazon doesn’t fulfill meltable inventory. This is primarily due to the fact that warehouses are hard to keep cool during the summer. As a result, Amazon marks anything “meltable” as “unsellable” from 1 May to 30 September.

What to do with Meltable Inventory

Your first bet should be to try to sell it. Most meltable inventory is also perishable, so its entirely possible that you might not be able to sit on it until the end of September. Yes, you might not make as much, or, you might even have a loss, but, at least it doesn’t expire on you.

This probably won’t sell so well in October.

If you can’t sell it, your next best option is to remove it, then you might be able to seller-fulfill or I don’t know, give it to the neighborhood kids. If you don’t remove it by a certain time, Amazon will destroy it for you. Destroy, it sounds so, destructive. Wouldn’t that chocolate be nicer to enjoy yourself, rather than it to be thrown into some giant masher in an Amazon warehouse?

Wrapping Up

As with many aspects of Amazon, this is definitely something you want to stay on top of. If you do a lot of perishables, you’ll really want to check what is and is not meltable. You’ll likely find some things that aren’t truly meltable, are categorized by Amazon as meltable.

Do you have any meltable inventory left? Will you recall it or discount it?

Earlier this week, Amazon rolled out changes to their Amazon Seller app. I call these changes because, I’m not entirely sure they are all enhancements. There are some new features though, which I’ll also cover in this post. You can see what the Amazon Seller App used to be like here and here.

User Interface Changes

Most of the changes to the Amazon Seller App appear to be more focused on the User Interface, and ultimately, the user experience. They moved some things around, and provide more detail and functionality on the “Home” screen. The below graphic shows the differences.

You’ll notice that there’s more information here. There are a few things I’d like to point out below.

Of particular note, the “Scan” button has been removed from the bottom, and instead resides in the upper left.

At the top there is a slider, where you see your sales for the day, number of products, current balance, next payment (all standard), and adds your Customer Feedback rating. I find that I don’t monitor my rating terribly often, so the functionality on the Amazon Seller App seems to be excessive, but I can understand how others might prefer that. I generally find customer feedback and my seller rating to be most easily managed from Amazon’s Seller Central.

An additional interface change of note, is the removal of a number of key functions from the menu bar on the right.

This could impact folks, I know it is impacting me and some of my workflows.

Historically, you could orient the graph to show you month or week, and dollar sales or unit sales. Now you can see a few more options in the screenshot below:

I’d imagine that this is beneficial for folks that like to slice the data in multiple ways.

Additionally, you can click on a particular bar, and do further analytics by day.

Again, interesting for those that like to do more data analytics on their phone.

Initial Feedback

I haven’t played around with the app too much, but others on twitter that have weighed in, have highlighted the app’s increased penchant to crash. My personal experience was that it seemed to be a data hog, and without a strong data connection, it was barely functional. In some of the places I source, I usually find that I have a single bar of signal, so this is a particular concern for me. That said, I think things are still pretty new, so it may be too soon to tell.

Conclusion

I’m glad to see that Amazon is continuing to improve the Amazon Seller App. I feel like in this case, they may have taken away some functionality that can be useful, and the new functionality, while nice, provides for a challenged experience. I think more data is great, but, to the same point, the point of the Amazon Seller App, in my opinion at least, is to facilitate sourcing and some business management functions. You have never been able to create shipments in the app, for example. That said, I’m not entirely sure why Amazon is enhancing the analytics, when there are other areas that they could be enhancing in the app, like enhanced recognition when scanning, perhaps an option to store data for faster scanning, list functionality, and more functionality in the “Inventory” menu, like a link to the listing within the app.

What do you think about the enhancements? Do you find the data analysis addition of particular value?

Amazon Long Term Storage Fees are something I try to avoid whenever possible. That said, the past few times, they have come with a rather interesting caveat that has made me rethink as to whether I should really remove or not.

Amazon Long Term Storage Fees – assessed 15 February

Amazon sent a fairly long e-mail that highlighted a number of things:

Long Term Storage Fees will be assessed on 15 February

Units at an Amazon Fulfillment Center for 6-12 Months will be assessed at $11.25 per cubic foot

Units at an Amazon Fulfillment Center for longer than 12 months will be assessed $22.50 per cubic foot

Units at an Amazon Fulfillment Center for longer than 24 months will be test units for Amazon Prime UAV Delivery. (Kidding!)

Units will be subject to long term storage fees unless they are removed before 15 February

If you do remove, you will not be able to send in additional units until July 1, 2017 – Which is Likely to late to stock up for (unannounced) Amazon Prime Day 2017.

Unlike past long term storage periods, there will be no free removal promotion

What should you do?

Everyone is different here. I for one used Q4 as an opportunity to clear most of my long term inventory out. That which I haven’t cleared out is seasonal inventory that I have to sit on because, otherwise, I’ll miss that particular season. Now that said, for me, I will remove all but a few units of seasonal inventory and store it at my warehouse until I’m closer to that season. You can only imagine how much my warehouse cleared out for Q4 for example.

Conclusion

The fact is here, that Long Term Storage Fees are a very real cost for Amazon Sellers. I know that folks in the various groups that I participate in are getting better. Others are cutting them even more ruthlessly. The fact is, they are little value add. In this case, you have to assess if not being able to send in that ASIN until 1 July 2017 is worth paying the fee or not. Its a long time to be blocked on an ASIN, and a lot of things can change. So definitely consider that.

All accounts indicate that Amazon has done this without any advance notice. Specifically if you haven’t sent your shipment in by 10 October, you won’t be able to send a shipment in until 19 December. Of course the initial reports of this came out late on 10 October, with more official reports coming out on 11 October. There’s already a short thread on Reddit of folks that are unhappy about this development.

Only so much Fulfillment Center space

The Bloomberg article references Amazon’s fulfillment center (FC) expansion–21 new warehouses this year through September 2016. The fact is, Amazon’s warehouses have been full for quite a while. This has been indicated by Amazon restricting shipment of products that sufficient quantities already existed in FCs, increasing FBA Storage fees, with even more changes, all geared toward getting slow selling units out of centers. After all, how could these cool little robots operate without having some space to move around?

Good for established sellers?

A lot of established sellers see this as a good thing. Fewer sellers to compete with for Amazon Prime buyers. In theory, this helps, especially considering ProPublica’s study saying that Amazon’s pricing algorithm favors Amazon and Prime Sellers over Merchant Fulfilled. For long time sellers, this is not a huge surprise. However, with the right undercutting, Merchant Fulfilled sellers can get the buy box, although that usually comes at a much lower profit. The likely increased number of Merchant Fulfilled sellers could shift the balance for the algorithm, but, it might not.

Still reason for concern for all sellers

This action, along with previous no-notice changes, such as brand restrictions are cause for concern. I’ve made the argument that Amazon is similar to Airline Frequent Flyer programs, in that they have all the power, and we have little leverage. The fact is, more and more, it is important to remember that things can change at any time. This is a very concerning reality, especially as many ramp up for Q4.

Wrapping Up

This is not the best of news for new sellers who have been looking at getting into utilizing Fulfillment by Amazon. The fact that Amazon restricts new sellers from FBA without any advance notice is awfully concerning for many. Hopefully this is the last of a string of less than positive actions, but, I suspect that there is still more to come. The real question for me is, whether these actions will help Amazon get the overfilled fulfillment centers under control.

That time is upon us! Welcome to Q4! I know. If you’ve been following this blog, you already know what Q4 means. It is the time where we ramp up, send in as much of the stuff we’ve been finding over the past 9 months, and hope we sell before Amazon’s crazy storage fees kick in!

Dates to plan For – Sort’ve

Amazon hasn’t released this year’s dates, but using 2015 as a guide, you’ll want to make sure that your inventory arrives at Amazon by or before 9 November in order to be in stock for Black Friday and Cyber Monday.. Last year it was 11 November, but this year Thanksgiving is 2 days earlier.

You’ll want to make sure your inventory for delivery by Christmas is in by 2 December to be safe.

Box information becomes mandatory effective 1 November

Per Amazon:

Hello from Fulfillment by Amazon.

As a reminder, effective November 1, 2016, we will require sellers to provide box content information for each box sent to Amazon. By providing box content information, your products move through our fulfillment network more efficiently and become available for sale sooner. If you choose not to provide this information, Amazon will need to process your box contents manually for a fee of $0.15 per unit in November and December. The fee will be $0.10 per unit for January through October. If you provide box content information, you will not be charged this fee.

You will be able to provide box content information (including expiration dates, if applicable) using any one of the following methods:

This is less than fun, especially as we all ramp up for the business time of the year, but the fact remains, Amazon has taken their time in implementing this. Hopefully by November 1st, we’re all comfortable with it, and are not incurring a $0.15 per unit fee.

Conclusion

We are entering the busiest time of the year for resellers. Of course, this should also be the most lucrative time of the year for most resellers. It will be an exciting few months!

What are you doing to prepare for Q4, and how will you be maximizing the next two months?

Amazon has clearly been working hard to free up space in its Fulfillment Centers. First, preventing folks from sending in units when “sufficient supply existed in warehouses,” then increasing storage fees in July. Well, out today, Amazon has announced that they will no longer exempt one unit of each product, from the long term storage fee.

Long Term Storage Fee Assessed on all inventory effective 15 February 2017

Per Amazon’s notification:

In the past, one unit of each ASIN in storage has been exempt from the twice-annual Long-Term Storage Fee. Effective with the February 15, 2017, Long-Term Storage Fee assessment, this exemption will end. A Long-Term Storage Fee will be assessed on all inventory that has been in a U.S. fulfillment center for six months or more. There are no additional changes to the Long-Term Storage Fee at this time, other than there will no longer be a single-unit exemption effective February 15, 2017.

I think it is positive that Amazon is giving us what I would say, is sufficient notice. In fact, Amazon is also providing free removal of one unit of every ASIN, for which you remove between 19 September and 14 October.

Last week, I wrote that it was a dark time for Amazon Sellers. I still believe it is, but there may be a silver lining. Much like some airline programs–I’m looking at you Delta–Amazon doesn’t always communicate the most efficiently with its sellers. I totally get that. I run into communication issues in my day job all the time.

That all said, lets get to the good news!

$1,500 ungating fee won’t apply to existing merchants

Courtesy of Ben Turnbull and CNBC, we learn that Amazon won’t apply to existing merchants. This is both reassuring and concerning at the same time. Reassuring because, those Amazon sellers who have sold the brands that Amazon is now clamping down on, should be ok. But what about those folks that have also been around, but not sold a particular brand? I mean, I’m sure there are some Amazon sellers who have been around, but, somehow been under a rock with regard to some brands that are popular four letter brands. Worse yet, what about the new sellers, who legitimately want to build a business selling on Amazon? Now, they must do the calculation as to whether paying $1000-1500 to get ungated in a particular brand is worth it. That assumes they can even get a letter, or acceptable receipt, if that is a requirement.

What this all means for Amazon Sellers

Candidly, I’m not sure that this changes much. The fact of the matter is, Amazon is changing things up. They are attempting to rid their marketplace of counterfeit items. I totally get that. I love that. It’s a reason why I never do commingled inventory, even if it is easier. But the fact remains. This will erect additional barriers to entry to reselling on Amazon. Some say that Amazon has had a huge influx of sellers lately, I think, if there wasn’t the concern of counterfeit merchandise, that Amazon would love this. Competition forces prices down. Amazon is in a business to provide the customer–read: not seller–the lowest, competitive price. The challenge, however, is when Amazon lets many businesses that may be based off-shore, that results in counterfeit products being introduced into the Amazon supply chain. I think it’s still a to be determined, to see how this all ends up.

Conclusion

Overall, this was a welcome sign at the end of the week. I still feel like there is much uncertainty. This is part of the reason that I always advocate that you add a product to inventory before buying. It takes only a few seconds, but can save minutes, if not hours of heartache. Other than that, there are a bunch of groups–subscription like Mile High Reselling Club, and non-subscription based–that have talked about the various brands, like Lego, Nike, and others, and potential changes as time goes by. Overall, this is a very uncertain time, which is most unfortunate, as we are fast approaching Q4, the best time of the year for resellers!

Have you been restricted on any particular brands as an Amazon Seller? Please share in the comments.

The Key Similarity between Amazon and Frequent Flyer Program Changes

What jumps out at me the most, is the fact that both Amazon and Frequent Flyer Programs can change the rules whenever they want. Worse yet, they can change the rules, and you pretty much have two options: Take it in the chin, or walk away. There’s often no negotiating, because they own the game.

That awesome iPad deal that you got over the weekend, is now gated when you try to send it in. You may have found a great product, but now your only option is to sell it on Ebay. That first class award flight to Bali that you’ve been saving up for just went from 67.5k to 110k miles. If you made Executive Platinum this year on miles, don’t forget, next year you’ll also need to spend $12k with American, in order to requalify. Or, you could look a the fuel surcharges that are slowly going away, many of which stuck around months, if not years after fuel prices dropped off of their highs.

As I write that, the idea that Amazon requires a nonrefundable payment of $1,000 for a brand ungating, and Airlines are now requiring upwards of $12,000 spending in their math, to get top tier status, seems really similar.

Is there a solution?

The answer I think most folks go to first is regulation. I’m convinced that every time there’s a no-notice devaluation on the Frequent Flyer Program side, that the idea of regulating the Frequent Flyer Programs will gain traction. I’m not sure that is so good for those of us who maximize the program, I’m not so sure the programs would even continue to make sense for airlines, if they were heavily regulated.

For Amazon though, I think the answer is different. The brand restrictions are due to a rise in counterfeit products passing through Amazon’s warehouses. But rather than restrict many popular brands, Amazon could instead amend their receiving processes, whether its comparing the received product to the Amazon listing photographs, or something. Should Amazon’s actions be regulated? I’m not even sure how that could happen, but, I don’t know that it would help.

Lagging Indicators

The one thing that I think both Amazon and Frequent Flyer Program changes result in, are lagging indicators. Its not ideal. You see, they make the changes, and then it takes months, if not years, to see the impact of those changes. By the time you do see the impact, people’s habits have changed. For example, American may not see the impact of their elite status changes, until December 2017, more than a year away. Amazon, on the other hand, could see a bad Holiday Season in 2016 (Sellers call this Q4), but those numbers won’t really be reported out until January or so.

Whether it is December, 2017 or January, 2017, it will be too late to recover. Sure, Amazon can reduce some of their brand restrictions, but, the 4th quarter is what makes most retailers and resellers’ years. That’s why the Friday after Thanksgiving is called Black Friday, because retailers finally make it into the black ink, vice red ink, in the ledger. Amazon reacting in January, might save 2017, but 2016 would hurt a great many.

American, on the other hand, will likely see a decline in flights from their high level elites in 2017, as we make our decisions of where to spend our travel dollars early. Many of us have no intention to requalify for 2018, and our spend will reflect that. The question is, whether American can react in time, or make meaningful change.

Conclusion

Ultimately, we must play by others’ rules in many, many aspects of our lives. It is an unfortunate reality. It is most striking though, to see two completely different industries, act so incredibly similarly. That said, I think it is important to understand the various Amazon and Frequent Flyer Program changes, and to understand the programs in general, so we can better adapt to those rules.

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